Australian heavy crude premiums ease
Heavy sweet Asia-Pacific crudes remain in demand for use in fuel oil blending, although reduced vessel movements because of the impact of Covid-19 has pulled premiums down from record highs at the start of the year.
Australian heavy sweet Pyrenees for November loading traded last week at a premium of $5.10-5.20/bl to North Sea Dated, its lowest premium in 19 months. Pyrenees' premiums surged to a record high of $30.50/bl to Dated in January for March-loading volumes. Australian heavy sweet Van Gogh is currently valued around a $7.55/bl premium to Dated, after the grade traded at premiums as high at $27.80/bl in January. But no trades have been done recently for the grade as the Van Gogh Ningaloo Vision floating production, storage and offloading vessel (FPSO) has been in Singapore since April for maintenance. The FPSO may not return to Australia until early next year, according to some traders, as Covid-19 travel restrictions have made it more difficult to move personnel to Singapore to bring the FPSO back.
The values of these low-sulphur, high-density Australian crudes, as well as South Sudan Dar Blend, firmed in late 2019 and early 2020 because they were blended directly into bunker fuel to meet the International Maritime Organisation's tighter sulphur limits for marine fuels implemented in January 2020.
South Sudan's Dar Blend rose to a record high premium of $6.20/bl to Dated in January but is currently around a $1.25/bl discount to Dated. Dar Blend did not strengthen as much as Pyrenees and Van Gogh. Although the crude is sometimes used for fuel oil blending, it has a much lower flash point — the temperature at which fuel vapour ignites — compared with the Australian grades, limiting its suitability.
Flash point is key to the suitability of crudes for use in fuel oil blending. Australian heavy sweet Vincent firmed to a premium of $8.15/bl to Dated in late July from a $1/bl discount to Dated at the end of April, after producer Woodside boosted the grade's flash point to around 100°C , allowing it to be used for fuel oil blending.
But overall softer demand from fuel oil blenders has recently weighed on premiums of these heavy sweet crudes. Fuel oil stocks in Asia-Pacific have generally been higher this year compared with late last year, partly because of reduced global oil demand as the impact of Covid-19 has curbed shipping movements. Production cuts by Opec+ this year have also reduced to some extent the export movements of crude from producing regions.
Bunker fuel sales in Singapore in August did rise to a five-month high, although it is unclear if this is sustainable, given increased demand concerns from the continued Covid-19 outbreaks worldwide. The rise in overall bunker sales in August was driven by an increase in high-sulphur fuel oil because of the shrinking number of ports providing the grade, but this growth may prove limited as scrubber installations have slowed recently. Sales of low-sulphur fuel oil (LSFO) in Singapore in August also fell by about 2pc from July to 2.84mn t, accounting for 69.6pc of total bunker sales. The higher viscosity LSFO 380cst grade accounted for the bulk of sales at 2.23mn t.
Despite the weakening in the premiums for these heavy sweet crudes, they still fared better compared with some of the light sweet, middle distillates-rich Asia-Pacific crudes. Their spot differentials slumped this year with a collapse in Singapore jet fuel refining margins. Malaysian light sweet Labuan fell to a discount of $4/bl to Dated in April, its deepest discount since at least March 2009, with the grade currently valued around a 20¢/bl premium to Dated for November-loading volumes.
Related news posts
US set to resume crude purchases for SPR
US set to resume crude purchases for SPR
Washington, 7 May (Argus) — The US is set to resume crude purchases for the US Strategic Petroleum Reserve (SPR), after calling off a planned 3mn bl refill last month following a rise in crude prices. The US Department of Energy (DOE) today said it plans to purchase up to 3.3mn bl of sour crude for delivery in October to the SPR's Big Hill storage site in Texas. The solicitation sets a maximum price of $79.99/bl for the offers, a slight increase from the $79/bl ceiling it used in the recent monthly purchases. The agency last month called off two pending solicitations that sought to buy 1.5mn bl/month for delivery to the SPR's Bayou Choctaw site in August and September, citing higher crude prices. The most recent SPR refill, nearly 2.8mn bl of sour crude for delivery in September, cost an average of $81.34/bl. DOE says it has has already purchased a total of 32.3mn bl at an average price of $76.98/bl, well below the average $95/bl it received from the sale of 180mn bl of crude from the SPR to respond to market turbulence after Russia invaded Ukraine in 2022. Energy secretary Jennifer Granholm told lawmakers last week that two out of four SPR sites were undergoing maintenance and would not be able to accept SPR deliveries until the end of the year. "We want to continue to fill it, and we will," Grahnolm said. The SPR held 367.2mn bl as of 3 May. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
General Petroleum expands UAE base oil storage facility
General Petroleum expands UAE base oil storage facility
Singapore, 7 May (Argus) — UAE-based lubricant producer General Petroleum plans to finish building the second phase of its UAE base oil storage terminal by the end of May, according to a source close to the firm. The construction started in March and will consist of 12 storage tanks, each with a 2,200t capacity. The producer aims to start operations at the second phase in June. Construction for a third phase is also scheduled to begin in June 2025, which will add four storage tanks of 6,000t capacity each. The first phase of the storage terminal started operations in March 2020 . That storage terminal consisted of eight storage tanks, each with a 1,550t capacity. The facility, located in the Hamriyah free zone in Sharjah, is expected to have a combined 62,800t base oil storage capacity after the phase three expansion is complete. The terminal is connected by two pipelines to the jetty. General Petroleum operates a 150,000 t/yr lubricant plant opposite the storage terminal, and exports more than a third of its production to overseas markets, the same source added. The company had highlighted North Africa, Asia-Pacific, and the Americas as key markets for growth. The blender also has a 25,000 t/yr production facility in Tanzania and a 35,000 t/yr facility in Uganda. The UAE is a major lubricant blending and trading hub in the region because of its strategic location and logistics infrastructure. The Mideast Gulf is also largely self-sufficient on base oil supply and is typically a net exporter of the lubricant feedstock, especially for Group I and Group III supplies. Regional base oil supply is set to rise in the years ahead with planned expansions. Africa is a growing market for base oils, propelled by its gross domestic product and population growth. Rising mobility needs and vehicle ownership is also expected to boost demand in the years ahead. Africa predominantly produces Group I base oils but remains structurally short on supply. Overseas supplies, including those from the Mideast Gulf, make up a sizeable portion of the region's imports. By Chng Li Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil unlocks relief spending to flooded state
Brazil unlocks relief spending to flooded state
Sao Paulo, 6 May (Argus) — Brazil's president Luiz Inacio Lula da Silva signed a decree to ease relief spending to Rio Grande do Sul state, which has been hit with historically heavy rainfall and floods. "We are going to do everything in our power to contribute to Rio Grande do Sul's recovery," he said today after signing the decree, adding that was only the first of "a large number of acts" for the state. The decree recognizes the state of emergency in Rio Grande do Sul and allows the federal government to grant funding and tax waivers to the state without having to comply with spending limits. In addition, it makes rules for public authorities to contract services and purchase products more flexible. The decree still needs both senate and congressional approval — which should be hasty, as both the senate and house leaders were present at the decree's signing. It is still not clear how much money it will take to rebuild the state, chief of staff Rui Costa and planning minister Simone Tebet said. But the minister of regional integration Waldez Goez estimated that it will take around R1bn ($200mn) to rebuild the state's highways. Rio Grande do Sul has been hit with heavy rainfall since 29 April. The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm. Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). State capital Porto Alegre is expected to receive more rain later this week, according to Rio Grande do Sul-based weather forecaster MetSul. MetSul warned that parts of the Porto Alegre metropolitan area could remain uninhabitable for weeks or months. The floods have left at least 83 dead and 111 missing, according to the state government. An additional 130,000 people have been displaced from their homes. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
ANP reduz mescla de etanol e biodiesel no RS
ANP reduz mescla de etanol e biodiesel no RS
Sao Paulo, 6 May (Argus) — A Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP) diminuiu, temporariamente, a mistura obrigatória de etanol e biodiesel no Rio Grande do Sul por 30 dias, a partir de 3 de maio, em meio a enchentes catastróficas no estado. O mix de etanol anidro na gasolina caiu dos atuais 27pc para 21pc, enquanto o do biodiesel no diesel S10 está agora em 2pc, queda em relação à porcentagem vigente de 14pc. Também de forma temporária, a agência suspendeu a necessidade de mistura para o diesel S500. A ANP informou que pode revisar os prazos da medida dependendo das condições de abastecimento no estado. As chuvas no Rio Grande do Sul bloquearam rodovias e ferrovias que transportam os biocombustíveis para centros de distribuição, como Esteio e Canoas. O fornecimento de combustíveis fósseis pela ligação dutoviária da refinaria Alberto Pasqualini (Refap) às outras bases de distribuição do entorno não foi comprometido, afirmou a ANP. As enchentes no estado já deixaram pelo menos 83 mortos e 111 desaparecidos, de acordo com o governo local. Mais de 23.000 pessoas tiveram que deixar suas casas e cerca de 330 cidades estão em situação de calamidade pública. Por Laura Guedes Envie comentários e solicite mais informações em feedback@argusmedia.com Copyright © 2024. Argus Media group . Todos os direitos reservados.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more